Barclays Plc · LSE:BARC
Barclays — 9M 2010 Earnings Presentation
67 slides from Barclays's earnings presentation, November 2010
Slide 1: Autumn 2010 Third Quarter Investor Presentation
Autumn 2010 Third Quarter Investor Presentation 1 Global Autumn Retail 2010Banking InvestorFact Presentation Pack 2010 Page number l Document title or file name l date l version //change this information in the master layer – View: Masters: Slide Master//
Slide 2: 2009 & 2010 Priorities, 2010 Strategic Framework
"Our income and profit performance was resilient for the first nine months of 2010 despite a subdued economic environment and moderate volumes. We continued to invest in a number of our businesses on a pay-as-you-go basis with a view to increasing future returns on equity. Our loan loss rate and ove
Slide 3: Performance highlights: nine months to 30 September 2010
Performance highlights: nine months to 30 September 2010 • Resilient profit and income performance • Higher returns on risk weighted assets • Impairment charges significantly reduced • Strong capital management, stable leverage and high quality liquidity pool • Well placed to meet new regulatory req
Slide 4: Income and profits
Income and profits Nine months ended 2009 change 2010 £m September £m % Income 22,872 22,358 2 • Income up 2% and up 3% excluding the impact Impairment charges (4,298) (6,214) (31) of own credit and debt buy-backs Net income 18,574 16,144 15 Operating expenses (14,476) (12,233) 18 • Profit before ta
Slide 5: Returns
Returns Nine months ended 2009 2010 £m September £m Return on equity 6.7% 8.7% • Return on average shareholders’ equity of 6.7% • Return on average tangible shareholders’ equity Return on tangible equity 8.1% 12.0% of 8.1% • Return on average risk weighted assets up to Return on risk weighted assets
Slide 6: Profit before tax by business
Profit before tax by business 2010 2009 Change Nine months ended – September £m £m % UK Retail Banking 734 610 20 Barclaycard 561 570 (2) Western Europe Retail Banking (34) 237 nm Barclays Africa 106 93 14 Global Retail Banking 1,367 1,510 (9) Barclays Capital 3,218 1,416 127 Barclays Corporate (414
Slide 7: Barclays Capital results
Barclays Capital results 2010 2009 Change Nine months ended – September £m £m % Top-line income 9,953 14,220 (30) Income credit market losses (240) (4,251) 94 Own credit (96) (1,298) 93 Total income 9,617 8,671 11 Impairment (321) (2,220) 86 Net income 9,296 6,451 44 Operating expenses (6,094) (5,04
Slide 8: Barclays Capital quarterly P&L
Barclays Capital quarterly P&L Q3 10 Q2 10 Q1 10 Q4 09 Q3 09 Q2 09 Q1 09 £m £m £m £m £m £m £m FICC 1,948 2,253 2,695 2,711 2,714 3,883 4,344 Equities & Prime 359 563 493 334 545 748 538 Services Investment Banking 501 461 556 643 459 751 335 Principal Inv. 19 4 101 (46) 13 (107) (3) Top-line income
Slide 9: Impairment
Impairment (£m) AFS / Reverse repos 6,214 Impairment on loans 651 31% 4,298 111 5,563 4,187 Q3 09 YTD Q3 10 YTD 9 Autumn 2010 Investor Presentation
Slide 10: Group operating expenses
Group operating expenses Group operating expenses (£m) Current & Prior Year Other Performance Pension 92 14,476 147 FX Impact 224 Regulatory & 264 Infrastructure 599 Investment 917 12,233 Q3 09 YTD Q3 10 YTD 10 Autumn 2010 Investor Presentation
Slide 11: Cost : income and cost : net income
Cost : income and cost : net income Nine months ended 2010 2009 change September £m £m % • Net income up 15% Income 22,872 22,358 2 • Operating expenses up 18%, principally Net income 18,574 16,144 15 reflected continuing increased investment in the Group’s businesses of £917m, Operating expenses (1
Slide 12: Barclays of today versus 2007
Barclays of today versus 2007 Core Tier One Capital Ratio Adjusted Gross Leverage Liquidity Buffer £162bn 33x 10.0% 0.6x 21x 2.1x 8.5x 4.7% £19bn FY 07 Q3 10 FY 07 Q3 10 FY 07 Q3 10 12 Autumn 2010 Investor Presentation
Slide 13: Capital
Capital Risk Weighted Assets Capital Capital Ratios (£bn) (£bn) (%) 395 405 39.6 40.5 10.0 10.0 H1 10 Q3 10 H1 10 Q3 10 H1 10 Q3 10 RWAs Non-Core Tier 1 Non-Core Tier 1 Core Tier 1 Core Tier 1 13 Autumn 2010 Investor Presentation
Slide 14: Pro forma risk weighted assets projection under Basel III
Pro forma risk weighted assets projection under Basel III Pro forma RWA projection (£bn) ~90 ~555 ~(50) ~505 ~60 ~465 405 Basel II (Q310) Market risk add- Pro forma Basel CCR & Pro forma Basel Management Pro forma Basel on II.5 securitisation III (pre- actions III (post- add-ons management managemen
Slide 15: Pro forma Core Tier 1 ratios under Basel III at 31 December 2013
Pro forma Core Tier 1 ratios under Basel III at 31 December 2013 (2.2%) 3.5% 0.2% 13.7% 11.5% 10.0% Basel II (Q310) Capital impact of Consensus retained Basel II (Q413) Net RWA effect from Basel III (Q413) outstanding earnings (2010- Basel II.5/ III* * warrants 2013)* * Estimate based on company con
Slide 16: Commentary on H1 2010 Performance
Commentary on H1 2010 Performance 16 Global Autumn Retail 2010Banking InvestorFact Presentation Pack 2010 Page number l Document title or file name l date l version //change this information in the master layer – View: Masters: Slide Master//
Slide 17: International footprint
International footprint UK Non UK H1 09* H1 10 Income PBT Income PBT 26% 32% 39% 51% £16.3bn 49% £3.0bn £16.6bn £3.9bn 61% 68% 74% * Includes BGI and other discontinued operations 17 Autumn 2010 Investor Presentation
Slide 18: Margins in retail, commercial and private banking businesses
Margins in retail, commercial and private banking businesses Annualised NIM (bps) Liability margin compression 214 Asset margin (19) Treasury income and business mix increase 12 198 (9) H1 09 H1 10 18 Autumn 2010 Investor Presentation
Slide 19: Impaired asset coverage ratio
Impaired asset coverage ratio (£bn) Wholesale CRLs Credit Risk Loans (CRL) £22.7bn Retail CRLs 11.0 11.1 Coverage 9.9 52% £11.8bn Ratios 48% 8.2 44% Impairment £11.7bn 6.3 42% Allowances 42% 11.3 11.7 £4.9bn 10.0 7.5 5.5 H1 08 H2 08 H1 09 H2 09 H1 10 19 Autumn 2010 Investor Presentation
Slide 20: Adjusted gross leverage
Adjusted gross leverage £bn 30 Jun 10 31 Dec 09 Total assets 1,587 1,379 • Total assets increased by £208bn Derivative gross up (461) (374) AUM on balance sheet (2) (2) • Adjusted gross leverage maintained at 20x for Settlement balances (53) (26) the period end – it moved in the range of 20x to 24x
Slide 21: Self-funded retail and commercial balance sheet and flexible wholesale balance sheet
Self-funded retail and commercial balance sheet and flexible wholesale balance sheet Retail, Corporate, Wealth and Barclays Capital and Absa (£bn) Group Centre Capital Surplus 111 Liquidity 160 Wholesale Funding Wholesale Group Assets Surplus Liabilities 111 liabilities 772 723 139 Business Business
Slide 22: Liquidity and wholesale funding
Liquidity and wholesale funding Barclays Capital: movement in average term of net unsecured liabilities • Group liquidity pool increased to £160bn from £127bn at 31 December 2009 ≤ 1 Year 31 mths > 1 Year • Loan to deposit ratio improved from 130% to 124% 200 • Extended the average term of the net u
Slide 23: Barclays structure
Barclays structure Barclays PLC GRB CIB & Barclays Wealth Head Office and Other (Corporate and Investment Absa (Global Retail Banking) Banking and Barclays Wealth) Operations UK Retail Banking Barclays Capital Absa Capital Barclaycard Barclays Corporate Absa Cards Western Europe Retail Barclays Weal
Slide 24: GRB composition
GRB composition Customer Defined GRB • Mass consumer • Global banking and payment provider • Mass affluent • 37m customers • Business clients • 3.5k distribution points • 66k colleagues UK Retail Banking Geographically Focused Barclaycard • UK • US Western Europe Retail Banking • Western Europe • Af
Slide 25: GRB financial goals
GRB financial goals Profit growth Strong compound annual profit growth Improved loan to Liability growth exceeding asset growth deposit ratio Focus on existing markets and continue to Depth, not breadth diversify through products Generation of net Attractive returns and generation of net equity equi
Slide 26: GRB strategy
GRB strategy Barclaycard Western Barclays UKRB Europe Africa Deepen Mass Consumer Growth in Mass Affluent Opportunity with Business Clients Expansion in Payments Enabled by rigorous risk and cost management 26 Autumn 2010 Investor Presentation 26
Slide 27: GRB: UK Retail Banking
GRB: UK Retail Banking H1 10 H1 09 change • Income up 1% reflecting good growth in Barclays £m £m % Business, partially offset by the impact of margin compression Income 2,171 2,151 1 Impairment (447) (521) (14) • Total impairment charges of 77bps (H1 09: 102bps) of total gross loans and advances to
Slide 28: GRB: Barclaycard
GRB: Barclaycard H1 10 H1 09 change • Income down 3% primarily driven by lower net fees £m £m % and commissions reflecting the effect of the US Credit Card Act Income 1,958 2,009 (3) Impairment (890) (915) (3) • Impairment charges down 3%, reflecting the improvement in economic conditions in major N
Slide 29: GRB: Western Europe Retail Banking
GRB: Western Europe Retail Banking H1 10 H1 09 change • Income down 12% in a challenging economic £m £m % environment Income 602 682 (12) • Impairment charges up 10% reflecting better Impairment (133) (148) (10) delinquency trends and tightened credit criteria Net income 469 534 (12) • Operating exp
Slide 30: GRB: Barclays Africa
GRB: Barclays Africa H1 10 H1 09 change • Income up 10% as a result of improved net interest £m £m % margins and trading income Income 403 365 10 • Impairment charges down 24% representing 200bps Impairment (48) (63) (24) of total gross loans and advances to customers (H1 09: 270bps) Net income 355
Slide 31: Barclays Capital
Barclays Capital H1 10 H1 09 change £m £m % Top-line income 7,126 10,489 (32) • Profit before tax up significantly to £3,400m Credit market losses in (65) (3,507) (98) income • Excluding movements on own credit, profit before tax Own credit gain/(charge) 851 (893) nm up 31% to £2,549m Total income 7
Slide 32: Barclays Capital income summary
Barclays Capital income summary (£m) 5,000 Top–line income Total income Net income 4,000 3,000 2,000 1,000 0 Q3 09 Q4 09 Q1 10 Q2 10 32 Autumn 2010 Investor Presentation
Slide 33: Barclays Capital analysis of top-line income
Barclays Capital analysis of top-line income (£m) 2,714 2,711 2,695 Q3 09 Q4 09 Q1 10 Q2 10 2,253 643 545 563 556 493 459 461 334 101 13 (46) 4 Fixed Income, Currency Equities and Prime Investment Banking Principal Investments & Commodities Services 33 Autumn 2010 Investor Presentation
Slide 34: Barclays Capital momentum
Barclays Capital momentum League tables* H1 10 H1 09 change share share rank rank rank % % Global Debt 1 8.2 2 8.6 US Debt 2 12.1 4 11.9 All International Bonds 1 8.7 1 9.4 Global Foreign Exchange 3 11.1 3 10.5 US M&A completed 2 21.7 9 10.6 Global M&A completed 4 14.5 19 4.2 US IPOs 5 8.7 6 7.1 • B
Slide 35: Barclays Capital income and cost analysis
Barclays Capital income and cost analysis £m H1 10 H1 09 change % Net income 7,603 4,215 80 Operating expenses (4,213) (3,176) 33 Profit before tax 3,400 1,047 225 Return on tangible equity 21% 7% Return on RWAs 2.2% 0.6% H1 10 FY 09 Cost : income ratio 53% 57% Cost : income (excluding own credit) r
Slide 36: Barclays Corporate
Barclays Corporate UK & Ire. Cont. Europe New Markets H1 10 H1 09 change £m £m £m £m £m % Income 1,122 147 132 1,401 1,638 (14) Impairment (280) (586) (83) (949) (718) 32 Operating expenses (463) (85) (281) (829) (768) 8 Profit/(loss) before tax 379 (524) (232) (377) 152 nm Loans and advances £52.8b
Slide 37: Barclays Wealth
Barclays Wealth H1 10 H1 09 change • Income up 22% principally reflecting growth in the £m £m % High Net Worth businesses and higher attributable net Income 757 623 22 interest income from the new internal Funds Transfer Pricing mechanism Impairment (27) (21) 29 Net income 730 602 21 • Operating exp
Slide 38: Investment Management
Investment Management H1 10 H1 09 change • Investment Management profit before tax of £31m £m £m % (2009: £37m) principally reflected dividend income from 19.9% holding in BlackRock, Inc. Income 34 28 21 • Investment carried as an available for sale financial Operating expenses (3) 9 nm instrument w
Slide 39: Absa
Absa H1 10 H1 09 change • Income up 14% predominantly reflecting the impact £m £m % of exchange rate movements Income 1,379 1,210 14 • Impairment charges down by 4% mainly as a result of Impairment (282) (295) (4) the continuing improvement in the retail portfolios Net income 1,097 915 20 associated
Slide 40: Appendix
Appendix 40 Global Autumn Retail 2010Banking InvestorFact Presentation Pack 2010 Page number l Document title or file name l date l version //change this information in the master layer – View: Masters: Slide Master//
Slide 41: Capital management
Capital management Core Tier 1 Bridge Attributable profit less BlackRock own credit impact 0.5% (0.5%) Regulatory Exercise of RWA warrants movements 0.3% (0.4%) Other net movement 10.0% 0.1% 10.0% FY 09 H1 10 41 Autumn 2010 Investor Presentation
Slide 42: Responsible Banking framework underlies strategy and execution across businesses
Responsible Banking framework underlies strategy and execution across businesses • Developed new framework to manage environment, social and governance issues and deliver against our Responsible Banking agenda • Barclays is included in key responsible investment indices including Dow Jones Sustainab
Slide 43: Risk Management Presentation
Risk Management Presentation Robert Le Blanc, Risk Director 43 Global Autumn Retail 2010Banking InvestorFact Presentation Pack 2010 Page number l Document title or file name l date l version //change this information in the master layer – View: Masters: Slide Master//
Slide 44: Topics
Topics • Overall impairment trends • Wholesale credit • Retail credit • Select Eurozone exposure • Trends in market risk • Outlook 44 Autumn 2010 Investor Presentation
Slide 45: Outlook: Loan loss rate begins to normalise
Outlook: Loan loss rate begins to normalise (bps) ‘92 property 250 slump 200 Financial crisis period 150 Period including Recovery period 118 telecom restructurings 100 20 Year Average of 90bp 50 0 90 95 00 05 H1 10 45 Autumn 2010 Investor Presentation
Slide 46: Total impairment: Reduced by 32% from H1 09
Total impairment: Reduced by 32% from H1 09 (£m) AFS / Reverse repos 4,556 Impairment on loans 32% 653 23% 3,515 60 3,080 12% 99 3,903 3,455 2,981 H1 09 H2 09 H1 10 46 Autumn 2010 Investor Presentation
Slide 47: Impairment on total loans and advances
Impairment on total loans and advances: 12 month decline of 24% in loan impairment (£m) Other 3,903 24% BarCap UKRB 3,455 528 11% BarCorp 2,981 559 14% Barclaycard 1,231 485 667 322 521 510 447 708 836 837 915 883 890 H1 09 H2 09 H1 10 Loan balances £474bn £472bn £506bn 47 Autumn 2010 Investor Prese
Slide 48: Wholesale impairment: 37% reduction from H1 09
Wholesale impairment: 37% reduction from H1 09 (£m) LLR 141bp Other BarCorp Intl 1,920 BarCorp UK 123 BarCap CME 162 21% 1,519 LLR 86bp BarCap Loans 404 120 20% 1,208 272 124 709 461 484 495 278 522 309 171 13 H1 09 H2 09 H1 10 48 Autumn 2010 Investor Presentation
Slide 49: Retail delinquency rates: UK Portfolios
Retail delinquency rates: UK Portfolios UK loans 2.7% 2.7% 2.4% UK cards 2.1% 1.8% 1.6% UK mortgages 1.2% 1.0% 1.0% H1 09 H2 09 H1 10 >90 days in arrears to charge off; not to scale 49 Autumn 2010 Investor Presentation
Slide 50: Retail delinquency rates: International Portfolios
Retail delinquency rates: International Portfolios Spain cards 8.7% 6.3% 5.1% Absa mortgages 4.3% 4.0% 4.1% US cards 3.2% 3.3% 2.9% Spain mortgages 0.8% 0.6% 0.4% H1 09 H2 09 H1 10 >90 days in arrears to charge off; not to scale 50 Autumn 2010 Investor Presentation
Slide 51: Retail impairment: 11% reduction from H1 09
Retail impairment: 11% reduction from H1 09 (£m) Other LLR 198bp International LLR 157bp UKRB 1,983 1,936 Barclaycard 2% 1,773 9% 594 574 471 469 467 405 906 875 880 H1 09 H2 09 H1 10 51 Autumn 2010 Investor Presentation
Slide 52: Impaired asset coverage ratio
Impaired asset coverage ratio (£bn) Wholesale CRLs Credit Risk Loans (CRL) £22.7bn Retail CRLs 11.0 11.1 Coverage 9.9 52% £11.8bn Ratios 48% 8.2 44% Impairment £11.7bn 6.3 42% Allowances 42% 11.3 11.7 £4.9bn 10.0 7.5 5.5 H1 08 H2 08 H1 09 H2 09 H1 10 52 Autumn 2010 Investor Presentation
Slide 53: Impaired asset coverage ratios: Consistent with business type
Impaired asset coverage ratios: Consistent with business type 78% Retail unsecured 71% 69% 52% 48% Group 44% 46% Wholesale 42% 40% Retail mortgages 18% 17% (UK + Intl) 13% H1 09 H2 09 H1 10 53 Autumn 2010 Investor Presentation
Slide 54: Select Eurozone countries: Loans and advances
Select Eurozone countries: Loans and advances 30 Jun 10 (£bn) Spain Italy Portugal Ireland Total Sovereign 6.4 8.6 1.2 0.3 16.5 fair value Retail 18.3 14.5 5.2 0.1 38.1 Wholesale 8.0 3.3 2.4 3.3 17.0 Total 26.3 17.8 7.6 3.4 55.1 • Retail primarily mortgages • Spain and Italy are largest lending port
Slide 55: Spain: Part of a diversified portfolio
Spain: Part of a diversified portfolio Gross loans and advances (£bn) Group Spain United Kingdom 227 Mortgages 14.6 Other EU 105 Governments 0.1 United States 81 BarCorp 6.9 Africa 53 Other Corp 1.0 ROW 40 Other retail 3.7 Total 506 Total 26.3 55 Autumn 2010 Investor Presentation
Slide 56: BarCorp Spain: Impairment driven by declining property values
BarCorp Spain: Impairment driven by declining property values • Prolonged recession Property • Commercial property values lower 38% Other Corp • Weaker refinancing 51% (£m) H1 10 H2 09 Impairment charge 553 149 Construction CRLs 1,910 1,320 11% Coverage 41% 30% Gross Loans & Advances = £6.9bn 56 Aut
Slide 57: Impairment summary: 32% reduction from H1 09
Impairment summary: 32% reduction from H1 09 BarCap CME 4,556 (859) BarCorp BarCap Intl Loans 365 (706) BarCorp UK / Ireland (135) UKRB B’Card Other (74) (25) (42) 3,080 H1 09 H1 10 • Rapid wholesale improvement • Significant BarCap reduction • Retail improvement • BarCorp Spain increase 57 Autumn 2
Slide 58: Barclays Capital market risk: Positive distribution of daily trading revenue
Barclays Capital market risk: Positive distribution of daily trading revenue Business days 65 H2 09 H1 10 48 32 27 27 22 19 9 1 1 2 0 <-30 -30 to 0 0 to 30 30 to 60 60 to 90 >90 Daily revenue (£m) 58 Autumn 2010 Investor Presentation
Slide 59: Barclays Capital market risk: Strong risk-adjusted revenue performance
Barclays Capital market risk: Strong risk-adjusted revenue performance £m Ratio 100 125% 75% to 115% 80 100% 60 75% Average of Daily Revenue 40 Ratio = 50% Average Daily VaR 20 25% 0 0% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 59 Autumn 2010 Investor Presentation
Slide 60: Review of conditions
Review of conditions • Economies: 1. Continued slow growth 2. Low interest rates, persistent unemployment 3. Spain economy remains weak 4. Other asset values broadly stable • Credit: 1. CRL balances are stabilising 2. Severity risk on recovery books 3. Late cycle default risk for corporates 4. Refin
Slide 61: Impairment outlook: Different wholesale and retail trends
Impairment outlook: Different wholesale and retail trends Impairment (£bn) 2009 = £8.1bn Wholesale Retail 4.6 3.5 3.1 2.6 1.6 1.3 2.0 1.9 1.8 H1 09 H2 09 H1 10 61 Autumn 2010 Investor Presentation
Slide 62: Risk Outlook
Risk Outlook • Market risk: 1. Risk levels to continue tracking client activity • Impairment: 1. Retail: continued reductions 2. Wholesale: slowing rate of reduction 3. Recovery risk against non performing assets 4. Maintain 2010 year end guidance 62 Autumn 2010 Investor Presentation
Slide 63: Risk Appendix
Risk Appendix 63 Autumn 2010 Investor Presentation
Slide 64: Wholesale Credit Risk Loans
Wholesale Credit Risk Loans: (£bn) Other 11.0 11.1 BarCorp Intl 1% 9.9 11% 1.4 1.6 BarCorp UK 1.0 Barclays Capital 1.6 1.1 2.3 1.5 1.6 1.4 6.3 6.4 5.8 H1 09 H2 09 H1 10 Loan balances £272bn £259bn £282bn 64 Autumn 2010 Investor Presentation
Slide 65: Retail Credit Risk Loans
Retail Credit Risk Loans: (£bn) Other 11.7 11.3 Absa 3% 0.8 10.0 0.8 13% WERB 0.6 2.8 Barclaycard 2.6 UKRB 2.5 1.4 1.5 1.0 3.4 3.5 2.8 3.1 3.1 3.1 H1 09 H2 09 H1 10 Loan balances £201bn £213bn £224bn 65 Autumn 2010 Investor Presentation
Slide 66: Forward-looking statements
Forward-looking statements This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to certain of the Group’s plans and its current goa
Slide 67: Investor Relations
Investor Relations Contact Stephen Jones Bojana Flint +44 (0)20 7116 5752 +44 (0)20 7116 2874 stephen.jones-ir@barclays.com bojana.flint@barclays.com James Johnson John Desgranges +44 (0)20 7116 7233 +44 (0)20 7116 8171 james.johnson@barclays.com john.desgranges@barclays.com Richard Caven Arésé Poll